Ethics & Public Policy Center

Class Warfare

Democrats are enraged at President Obama for his decision to extend George W. Bush’s tax cuts for all Americans, including top income earners. What explains their anger?

It cannot be because of concern for the deficit. After all, Democrats are responsible for an unprecedented two-year spending binge (the United States spent $1.3 trillion more over the last two-year period-2009-2010-than in the two-year period preceding it). In addition, increasing tax rates for the middle class, something Democrats oppose, would do far more to reduce the deficits than increasing tax rates for the top 2 percent of income earners. Nor do most Democrats believe the deal Obama struck with Republicans would hurt job growth. The White House is highlighting independent forecasts predicting the package could create as many as 2.2 million jobs next year.

What, then, explains the ferocious opposition many Democrats have for the tax deal Obama struck with Republicans? Senator Mary Landrieu spoke for many of them when she said, “I’m going to argue forcefully for the nonsensicalness and the almost, you know, moral corruptness of that particular policy. This is beyond politics. This is about justice and doing what’s right.”

For a lot of Democrats, this is not simply a matter of wise vs. unwise economic policy; it is about basic justice. Those who favor allowing high-income earners to keep more of their money are not simply wrong; they are guilty of an immoral act. One cannot help but conclude that even if lower tax rates for the wealthy led to strong economic growth, more jobs, and a higher standard of living for everyone, it wouldn’t matter. Punishing “the rich” would remain a top priority.

I am reminded of something Jimmy Connors, one of the greatest tennis players of his generation, said when asked to explain his fierce competitiveness. “I hate to lose more than I love to win,” Connors said. Of some liberals it can be said: They hate the rich more than they love economic growth or tax cuts for the middle class. It is more emotionally satisfying to punish the wealthy than it is to assist the nonwealthy.

Part of this is driven by a deeply ingrained animus toward the rich. If you examine how Democrats characterize the affluent in America, it’s almost always negative. The top income earners are portrayed as greedy, selfish, and generally contemptible. Mention the wealthy and liberals don’t think of creative, entrepreneurial, and hard-working people; they think of Gordon Gekko. Even President Obama, in arguing for passage of legislation his administration negotiated, couldn’t hide his disdain for “millionaires and billionaires.” David Axelrod, Obama’s senior adviser, referred to reductions in the estate tax as “odious.”

What animates this liberal cast of mind, apart from their contempt for the well-to-do, is the belief that the rich need to pay more taxes in order to reduce inequality. Inequality, according to this outlook, is intrinsically bad-and tax cuts for the wealthy, even if they make economic sense, accelerate inequality. This is an offense, and the role of the state is to narrow inequality through redistribution of income. Equality of outcome is, for liberals, more important than equality of opportunity. The duty of the federal government is to ensure greater “fairness” in the system.

There are many reasons why this attitude is, in the most fundamental sense, wrong. Here it’s worth recounting what a professor does every semester with his students. This professor told me and Arthur Brooks, with whom I cowrote Wealth and Justice: The Morality of Democratic Capitalism, that he will redistribute points on the first exam in order to achieve an equal outcome of results. He then tells his students to imagine that he has taken points off their exam in order to achieve that result. To a person, these students are adamant that such a thing is simply unfair; they have earned their grade, they insist. To take points off their exam in order to give them to someone who scored lower is unfair. That is, of course, precisely the point. The students understand, in very personal terms, that justice is a matter of receiving one’s due.

Pope John Paul II called “personal economic enterprise” a fundamental human right and, in his encyclical Sollicitudo Rei Socialis (“On Social Concern”), wrote:

Experience shows us that the denial of this right, or its limitation in the name of an alleged “equality” of everyone in society, diminishes, or in practice absolutely destroys the spirit of initiative, that is to say the creative subjectivity of the citizen. As a consequence, there arises, not so much a true equality as a “leveling down.” In the place of creative initiative there appears passivity, dependence and submission to the bureaucratic apparatus which . . . puts everyone in a position of almost absolute dependence.

This is not to say that a tax system that levies a proportionately higher tax rate on those with higher income is itself evil or even unwise. Simple justice does not require a society to tax the rich at higher rates than -others, but compassion for the neediest might. Adam Smith, in The Wealth of Nations, wrote, “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”

But a progressive tax system is a world apart from the modern liberal belief that inequality is itself a sin that government should take great strides to ameliorate. It cedes a frightening amount of power to the federal government to fine-tune outcomes and take upon itself the task of leveling out differences.

Indeed, inequality is the inevitable outcome of human differences. A healthy society, while caring for the poor and the weak, also needs to celebrate and reward human excellence. Tom Brady deserves to make more than his New England Patriot backup Brian Hoyer. And to demonize the wealthy is not only unwarranted but undermines civic comity. In an effort to promote an economic theory, liberals are appealing to class resentment, which is itself deeply contrary to the American ideal as interpreted authoritatively by Lincoln, who praised ambition and enterprise and upward mobility. “I don’t believe in a law to prevent a man from getting rich; it would do more harm than good,” Lincoln said. “So while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.”

Mary Landrieu is right in one respect: There is a moral calculus to the current economic debate. The problem for her is that she, and contemporary liberalism, are on the wrong side of it.

Peter Wehner is a senior fellow at the Ethics and Public Policy Center and a managing director of the economic website e21.